Professional Ethics & Regulation Corporate Social Responsibility

Question: Describe about the Professional Ethics Regulation for Corporate Social Responsibility. Answer: Introduction The purpose of this report is to evaluate the importance of Corporate Social Responsibility (CSR) in banking sector. According to the given scenario, the newly recruited non-executive directors are provided with an opportunity to share their views with the existing non-executive directors. In this meeting, the non-executive directors have raised concern regarding the banks corporate social responsibilities. According to them, the company is not capitalizing the corporate social activities for commercial benefits and therefore, the CEO has raised further concern to the matter. In this report, the importance of corporate social responsibilities and correspondent ethical guideline for the same has been emphasized. Nowadays, CSR is a tool of branding strategy making. Through this process, an organization can influence the stakeholders to improve their perceived value for the company (Rupp et al. 2015). However, overstating the CSR activities would affect business operation of an organization. According to the case study, Nantporth Bank plc has implemented efficient activities in order to conduct CSR; however, the entire cost has been incorporate in marketing budget. Eventually, the bank is not using the CSR activities as a differentiator tool. Moreover, some of the Banks activities are conflicting with the ethical guideline. For example, the bank has decided to move forward to online banking, which may cause 1000 redundancies. Therefore, it would be difficult to reconcile corporate social responsibilities and organizational ethics. This report will elaborate the need of ethical policies in order to deal with ethical dilemma. Use of Corporate Social Responsibility (CSR) In banking sector, the companies are responsible for facilitate the stakeholders including the society the company serves. Therefore, it is highly important to implement efficient strategies in order to provide advantage to the society and other stakeholders as well. The corporate social activities can be used as a marketing tool through which the company will be able to influence the stakeholders in a positive manner (Schrempf-Stirling, Palazzo and Phillips 2015). In order to use CSR as strategic position making tool, an organization should not overstate the corporate activities. Overstating the corporate social responsibilities would affect the brand image of the company. The overall cost of corporate social responsibility should be included in marketing budget (Vitell 2015). It helps the company to measure the effectiveness of the social activities through measuring the profitability. Strategic Positioning The term strategic positioning refers to the process of ensuring good position of the company in future environment. In case of Nantporth Bank plc, the company has decided to move forward into online banking, which may cause 1000 redundancy. Therefore, it would hamper CSR policy of the company, because through this movement, the company would not be able to provide advantages to its employees (Prez and Bosque 2015). The company should ensure that the employees are getting sufficient benefits as well as the community is being facilitated with good service. Formal policies on corporate social responsibilities and ethics would help an organization to reconcile social activities and strategic movement (Sun et al. 2015). The policies would help the company to ensure sustainability in changing environment. The company can promote the corporate social activities among the stakeholders in order to influence perception of the stakeholders positively. However, the company should not overstate the activities in order to maintain ethical guideline (Harjoto, Laksmana and Lee 2015). Therefore, it is important to implement ethical policies along with corporate social guideline. A sustainable CSR policy and ethical guideline would help the company to ensure that the company would be able to create strong brand image with changing environment. Differentiator In order to differentiate the company among others, it is important to facilitate the society along with other stakeholders with ethical guidelines. An organization should conduct ethical business in order to use CSR as a differentiator tool. There are several companies have participated in CSR activities; however, the practice of following ethical guideline is to less. The companies are publishing fabricated CSR activities in order to attract the stakeholders (Das, Dixon and Michael 2015). Such practices are unethical and therefore, the company should ensure appropriate discloser of CSR activities along with strong ethical guideline. In such manner, it would be possible for Nantporth Bank plc to differentiate the company among the competitors. A formal policy of corporate social responsibility helps an organization to give stakeholders the opportunity of sustainability. Implementing efficient policies for corporate social responsibility would help the company to introduce new bankin g schemes for the needful consumers (Jamali and Karam 2016). The involvement in social responsibilities would influence consumers perception about the company positively. Therefore, the investors and shareholders will rely on the business model of the company in long-term basis. Therefore, it can be said that a formal policy of corporate social responsibility would help the company to differentiate the brand from the competitors in market. Advantages of the policy The policies for corporate social responsibility and ethics can help an organization to increase customer retention (Saeidi et al. 2015). On the other hand, these policies help to develop strong relationship with the investors, customers and other networks with which the bank operates. Moreover, which such strategies, the company will be able to increase employee retention. Following are the advantages of CSR and ethics policies. Increasing customer retention Increasing employee retention Increase transparency with the stakeholders Improving organizational brand image and consumers perception The policies may bring advantages for the company from different aspects such as employee retention, customer retention, good brand image and sustainable business opportunity. Through an efficient policy of CSR and ethics would help the company to attract stakeholders like customers and investors. Showing regard to the existing employees would help the company to increase employee retention (Bartov and Yan 2015). On the other hand, a strong CSR policy would help the consumers to get viable information about the services. In order to differentiate the company among the competitors, the company should promote their activities among the stakeholders. Moreover, the company should comply with the GRI guideline while publishing the social activities through sustainable report. The internal policies have wide impact on the sustainability of the company (Ioannou and Serafeim 2015). However, it is important to comply with the regulations of external governance in order to promote CSR. Overall , the policies would help the company to build strong brand image through which the company would be able to capitalize on their social activities (Shen et al. 2016). The company has been associated with different social activities; however, it is important to involve in aggressive promotion of such activities in order to achieve organizational goals and activities. Scope of CSR policy The policy has been implemented by the company focuses on improving corporate social responsibilities along with the ethical guideline. However, the company is not capitalizing the CSR activities as strategic positioning tool. The policies with CSR and ethics would help the company to satisfy both internal and external stakeholders in an efficient manner (Rao and Tilt 2015). Moreover, the policies would help the company to ensure future development along with stakeholders advantages. Promoting the corporate social responsibilities among the stakeholders would help the company to maintain transparent communication (Shen et al. 2016). Therefore, it can be said that this kind of policy would give opportunity to the company in order to conduct sustainable business in global market. A formal policy of corporate social responsibility would help in over commitment of social activities. However, it is also important to incorporate ethical guideline in order to ensure that both internal and e xternal stakeholders are being facilitated. An ethical guideline would help the management to ensure that employees are given with appropriate recognition and regard. In this case, the concern stakeholders will be the employees. The company should not take any strategic movement through which the society would be facilitated, but the employees will be deprived. Incorporating ethical guideline would help the company to satisfy both society and their stakeholders in an efficient manner. When it comes to the policy improvement, it is highly important to incorporate ethical guideline to the corporate social responsibilities. It would help to maintain ethical business operations (Kili, Kuzey and Uyar 2015). The bank already has conducted certain activities in order to conduct sustainable business. However, the current decision of incorporating online banking would affect employee relations. Therefore, the company should implement policies in order to change job responsibilities of the existing employees rather than accepting redundancies. This policy would help the company to increase employee retention as well as to develop strong brand image of the company (Zhu, Liu and Lai 2016). Implementation of such strategy would help the company to ensure the stakeholders are being facilitated with efficient ethical guidelines. In order to conduct social responsibilities, the company should improve the technological aspects as per environmental change (Rao and Tilt 2015). Nowad ays, it is important to introduce online banking facilities in order to improve banking service for the consumers. However, digitalization of service would reduce need of workforce in banking sector (Alamer et al. 2015). Therefore, the formal policy may improve the facilities for the external stakeholders, but it would affect wellbeing of the internal stakeholders as well. Therefore, ethical guidelines should be incorporated through which the company would be able to ensure that ethical procedures are being followed. The policy should further include aggressive promotion of social activities among the stakeholders. In this manner, the company would be able to capitalize on the corporate social activities in an efficient manner (Fatemi, Fooladi and Tehranian 2015). The primary aim of the company is to increase profitability. Therefore, the company should implement such policy in which they can publish their social activities fairly through the sustainable report. This policy would help the company to ensure that the company is not entertaining unethical practices. Publishing over commitment through sustainable report would affect business operation of the company negatively (Dam and Scholtens 2015). Therefore, it can be said that incorporating such policy would help to improve the business operation and sustainability in future environment. Risk of incorporating CSR policy The incorporation of ethical policies may influence some risk factors. In this policy, the bank needs to reconcile strong corporate social responsibility and ethical message. For instance, the company should prevent redundancies while implementing online services to the consumers. The incorporation of ethical policies would increase organizational cost and reduce profitability. In order to serve the social community, the company should introduce online banking facilities (Zhu, Liu and Lai 2016). It will reduce the need of traditional branch operation. It can be described as a corporate social responsibility, because it would facilitate the social community and the consumers to overcome accessibility issues. On the other hand, the incorporation of online banking and reduce traditional branch operation has wide impact on employees responsibilities (Ferdous and Moniruzzaman 2015). The traditional banking procedures will be affected and therefore, redundancy rate will go high. In such si tuation, the bank will not be able to reconcile both corporate social activities and ethical message. Implementing this policy will tend the company to restructure job responsibilities of the existing employees in accordance with the environmental requirements. For example, the company should train the employees to cope up with newly implemented technologies. In that case, the company should communicate with the employees in an appropriate manner. The responsibility delegation plays major role in this aspect. Here, the company may face difficulties while delegating responsibilities to the employees (de Bakker 2016). Technological improvement may hamper work process of the existing employees. On the other hand, low acceptance rate of change among the employees can be a major issue. The employees may have poor knowledge in technology, which prevent the company to implement such policies. In this case, the company should provide training to the employees in order to improve their performance in accordance with the changing environment. However, it would increase organizational cost, whi ch will reduce overall profitability. The primary aim of the company is to increase organizational profitability (Alamer et al. 2015). However, the implemented policy would prevent the company from increasing the profitability. Therefore, it can be said that the most conflicting situation would be increasing profitability along with ethical guidelines. According to the ethical principles, the company should show high regards to their employees along with the social community. Therefore, the company should implement strategies in order to reduce employee turnover during change. In the given scenario, the company would like to facilitate the consumers. However, it has diverse impact on the existing employees. The company should facilitate all level of stakeholders with efficient policies of corporate social responsibilities. However, the incorporation of ethical policies along with corporate social policies would prevent the company from facilitating both internal and external stakeholders (Ioannou and Serafeim 2015). On the other hand, facilitating both the stakeholders would prevent the company from maintaining the profitability, which is the primary goal of the company. Therefore, it can be said that incorporating ethical policies would create conflict situation for the bank and therefore, it will be difficult for the company to achieve organizational goals and objectives. The threat related to the asset management subsidiaries: As mentioned by Bartov and Yan (2015) the CSR activities largely supports the actions or policies that contribute to the community development requirements. Hence, the organizations need to proactively refuse the actions or policies those are detrimental to the wellbeing of the communities. However, as opined by Ioannou and Serafeim (2015) such ethical decisions often strikes the organizations negatively, as it poses a threat to the financial viability of the companies. In the banking sector, it can become a threat to the organizations. As mentioned by Ferdous and Moniruzzaman (2015) in the major objectives of the financial organizations is to collect profit. With a number of diversified services the banks collects a substantial amount of profit. In the case of Nantporth Bank plc, the company has the subsidiary that offers mutual funds and money management services. The major source of profit is the companies those operate n the sectors like alcoholic drinks, tobacco companies and the companies in the extraction industry (mainly mining). Now, the essence of the CSR policy creates a strategic dilemma for the bank. As mentioned by Ioannou and Serafeim (2015) within the framework of the CSR policies the company needs to reject the strategy that creates harm to the community even with the promise of high profit. Moreover, the companies operating in the mining sector are creating environmental threat which is being indirectly encouraged by the Nantporth Bank plc. In such a context, the company can opt for the following strategies: Investing on the community programs against substance abuse: As the company cannot opt for rejecting its service to its star performers, it can invest on the projects those are directed to the cause of eliminating substance abuse or helping the victims of it. Charging a bit extra interest to those companies: This strategy can decrease the level of customer demand in this sector. Hence, the bank can opt for make a discussion with those customers and ensure that their contribution will be highlighted in the marketing and CSR strategy of the bank. Thus, by alluring them for positive brand image, the bank can opt for CSR which will not harm its business. Investing on the projects for environmental development: As mentioned by Ferdous and Moniruzzaman (2015) a number of excavation or mining companies opt for this strategy of investing in the environmental development or community development projects. Here, the example of British petroleum can be cited. Hence, it would be successful CSR project for Nantporth Bank plc. Moreover, the company can opt for investing on the health or livelihood projects of the people of those communities within which its customer is operating. Here, the company can also share the CSR investments of those companies. The threat related to the consumer finance subsidiaries: On the other hand, in the case of the consumer finance subsidiary, the company has to opt for high interest rates and aggressive debt recovery policies for operational success. As mentioned by Dam and Scholtens (2015) operation in the high risk market compels the banks to opt for the strategies like high interest rate and strict debt recovery policies. However, it essentially creates an ethical dilemma for the banks. As mentioned by Bartov and Yan (2015) the axiom of CSR advocates a policy that provides an ethical and humanitarian ground. Hence, the policy of high interest rate and strict debt recovery strategy puts a threat to the CSR guidelines of the company. In such a context, the company can opt for the following recommendations: A thorough investigation and opting for mortgage: As mentioned by Dam and Scholtens (2015) most of the banks in financial industry follows the strategy of careful lending to the debtors with a thorough investigation about the potentiality of the customer for the debt recovery. Hence, the Nantporth Bank plc. can follow this same strategy with a call for mortgage. The bank needs to align this policy to the national financial guidelines to eliminate any legal threat. It will decrease the threat of recovery failure. Increasing the EMI timeframe: As the company cannot decrease the interest rate, it can provide the opportunity of increased timeframe for credit return. It will support the high interest rate policy with an empathic ground. Thus, the company can eliminate threat related to the CSR policies on its business subsidiaries. Conclusion and Recommendations While concluding, it can be said that corporate social responsibilities has wide impact on strategic positioning. Effective set of policies in corporate social responsibilities would help the company to improve brand image. On the other hand, the incorporation of ethical guideline would help the company to satisfy both internal and external stakeholders of the bank. In the given scenario, the company has planned to introduce online banking facilities, which may facilitate the customers. However, this strategy has diverse impact on the employees. In such situation, ethical dilemma may appear and therefore, it is important to implement efficient set of ethical guideline. It would help the company to show regards towards the employees while conducting social responsibilities. In order to mitigate the risk factors of the ethical policies, the company should communicate with the stakeholders in a proper manner. The company should share their vision with the internal stakeholders before implementing any change. Apart from that, the company should maintain with the GRI guideline while publishing the corporate social responsibilities through sustainability report. In order to reconcile with the corporate social responsibilities and ethics, the company should provide adequate training to the employees. In this case, the employees will be unable to cope up with the new technology. Moreover, the job responsibilities of the employees will be changes. In such situation, employees may refuse to accept the change. Therefore, the company should build strong communication with the employees in order to restructure responsibilities of the existing employees. The company should not overstate the social responsibilities while publishing it through sustainability report. 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